Fuels Market News Magazine Winter 2019 by Fuels Market News

WINTER 2019

Your Source for News and Information

Reversal of Misfortune Oil in the U.S.

Benefits of Centralized Dispatch

Wind of Change

Sales of EVs

Car Wash Maintenance Checklists FMN Interviews Association Leaders

F U E L M A R K E T E R S • F U E L R E TA I L E R S • C O M M E R C I A L F U E L S

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20 Wind of Change by John Eichberger

24 A Reversal of

by Nancy Yamaguchi, PhD

34 Association

Leaders Look Back at 2018 and Ahead to 2019 by Keith Reid

Checking Them Twice—Car Wash Maintenance

by Todd Klitzke

52 Supply and

Demand—The Answer

by Brian Reynolds

57 The Benefits

of Centralized Dispatch by Chris Posey

features

Misfortune: Oil in the U.S.

46 Making Lists,

Lower Oil Prices and Equities

Not So Fast on that High Octane Fuel Proposal

54 Digital Signage Can Change Shopper Perception and Boost Sales at C-Stores

60 Do All

Fleet Fueling Companies Need Petroleum Logistics Solutions?

contents by Department

PUBLISHER'S NOTE

FUELS & SUPPLY 6

Lower Oil Prices and Equities by Joe Petrowski

Not So Fast on that High Octane Fuel Proposal by Keith Reid

Fueled for Thought by Joe O’Brien

Pump Up Your Profits with Biodiesel Webinar by Keith Reid

RETAIL OPERATIONS 40

2018 Top 10 Convenience Store Fuel Tank UST Alarms by Angela Wisdom

How Do Dripless Nozzles Reduce Risk at the Fueling Island? by Ed Kammerer

Digital Signage Can Change Shopper Perception and Boost Sales at C-Stores by David Warns

WHOLESALE & FLEET OPERATIONS 56

The Benefits of Centralized Dispatch by Chris Posey

The Reconciliation Reflex Webinar by Keith Reid

Do All Fleet Fueling Companies Need Petroleum Logistics Solutions? by Todd Ward

COMMERCIAL FUELS

The Long Tail and Training Scarcity

The Long Tail and Training Scarcity by Mark Murrell

Propane Autogas Refueling Options to Fit Any Fleet by Michael Taylor

68 ADVERTISER’S INDEX

PUBLISHER’S NOTE

EDITORIAL STAFF CEO & Group Publisher Gary D. Bevers GBevers@FMNweb.com Editorial Director & Digital Publisher Keith Reid KReid@FMNweb.com Director of Production & Managing Editor Kathy Bevers KBevers@FMNweb.com Digital Editor Scott A. Croom SCroom@FMNweb.com Industry Analysts/Editors Frank M. Hunter FHunter@FMNweb.com Nancy Yamaguchi, Ph.D. NYamaguchi@FMNweb.com Columnists and Contributors Greg Cushard Vladimir Collak Shane Dyer John Eichberger Doug Haugh Corey Henriksen Maura Keller Alan H. Levine Joseph H. Petrowski W. Brian Reynolds Fred M. Whitaker Editorial Board Ed Burke Lisa Calhoun George A. Overstreet, Jr. Joseph H. Petrowski Art Director Jeff Beene JBeene@FMNweb.com Marketing Director Joe A. Martinez JMartinez@FMNweb.com

A note from

Gary Bevers, Group Publisher At the risk of sounding repetitive, I again find myself very optimistic as we go to press with the Winter 2019 Issue of Fuels Market News Magazine. I have written those same words for three years running now, but it has never been more true. 2018 was a record-setting year for our economy, and it handed off the baton in the form of an economic gift that just keeps on giving. The U.S. stock market is off to a record start for 2019—its best performance since 1987. The market continues its record-setting bull market run despite all predictions for a bear market downturn for 2019. Main Street is also booming as we have record levels of job creation, rising wages, record low unemployment—particularly for those at our society’s lower economic levels—new business start-ups and the largest number of employees actively participating in the workforce. Consumers have more disposable income, so consumer optimism and spending are up. For the first time since the 1970s, the U.S. is the world’s number one Oil & Gas producer with both crude oil and refined product exports growing and reaching consumers around the world. Please read Dr. Yamaguchi’s article, “A Reversal of Misfortune” beginning on page 24 for more on our U. S. energy outlook. And, this past November, the U.S. Department of the Interior’s United States Geological Survey published an assessment of the largest oil and gas discovery in the U. S., which will double our strategic reserves. This shale find in the Permian Basin in Texas and New Mexico ensures that our U.S. energy independence will continue for decades to come. Further, reduced oil prices from shale (fracking) production have lowered the cost of transportation, food and raw materials. This is good news for the economy and particularly for our sector (fuel and convenience), as it directly raised business profit margins. By all indicators the U.S. economy is off to a great start for 2019 and is set to continue its upward financial trendline—keeping us the world’s largest and strongest economy as measured on a GDP basis. So, I am very confident that my optimism is well-founded as we all get to work doing our part to contribute to the greatest economy we have seen in years. I hope you enjoy this issue of Fuels Market News Magazine, and I always appreciate your thoughts and feedback. Feel free to reach out to me personally at GBevers@FMNweb.com or my cell: 832-444-7675. I’m always happy to hear from you.

Advertising Representative Bill Kaprelian 262-729-2629 BKaprelian@FMNweb.com

Gary Bevers CEO & Group Publisher

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Lower Oil Prices and Equities by Joe Petrowski

Lower oil prices are not a reason for an equity sell-oďŹ&#x20AC;. Equity Traders have it backwards. Lower oil prices are a reason to be bullish on America and Equities. Nothing annoys me more than watching TV analysts list declining oil prices and softer earnings at Majors as a reason for our recent Stock sell-oďŹ&#x20AC;.

FMNMagazine

FuelsMarketNews.com

“”

FUELS & SUPPLY

The U.S. macro swing from being the second largest importer to a net exporter is a $500-billion swing in balance of payments, crushing interest rate costs, strengthening the dollar and providing employment growth.

Low petroleum prices have always been good, are good now and always will be. I would suggest to analysts trying to explain market weakness that they say:

Yes, petroleum is in oversupply and probably has more downside (low 30s for WTI) but, consider:

The Democrats are circling the Trump Train.

The Fed is raising interest rates to ﬁght inﬂation of the 70s.

The Chinese have gone back to going barefoot and using phone booths.

The decline in petroleum product prices is a $100-billion gift to consumers.

All are closer to the truth than weaker petroleum prices.

The U.S. macro swing from being the second largest importer to a net exporter is a $500billion swing in balance of payments, crushing interest rate costs, strengthening the dollar and providing employment growth.

While earnings growth will slow for the integrated majors, they are still in great shape with strong balance sheets and:

In conclusion, petroleum has been priced below $40/barrel for the majority of time since Spindle Top and did not “spike” to $52 until the Suez crisis of 1956. And, with low oil prices we had both an economic and equity boom (doubling equity prices in the 1950 – 1970 period). Only an Arab boycott and OPEC strengthening combined with a besieged President ended the expansion. n

• Price/Earnings ratios of 11 (less than market as a whole)

• Dividend yields averaging 4.5% • Average growth rates of 26%, which even if cut in half would be twice the average of other sectors.

READ MORE at FuelsMarketNews.com

Equity traders are also extrapolating a one-toone relationship between integrated majors’ earnings and oil prices, when in fact, only 8% of earnings on average are coming from exploration and production (E&P) activities. Most integrated majors have or will be growing refining, marketing, distribution, natural gas and chemicals in lieu of petroleum production, and some of these activities like refining and chemicals benefit from lower petroleum prices.

FMNMagazine

Joe Petrowski Joe Petrowski has had a long career in international commodity trading, energy and retail management and public policy development. He currently serves as Director of Fuels for Yesway, where he oversees all operations of the fuels team, including pricing, procurement and management of the firm’s fleet services program. In 2005, he was named President and CEO of Gulf Oil LP and elected to the Gulf Oil LP Board of Directors. In October of 2008, he was named CEO of the now combined Gulf Oil and Cumberland Farms, whose annual revenues exceed $11 billion and that now operates in 27 states. In September 2013, Petrowski stepped down as CEO of The Cumberland Gulf Group. He is Managing Director of Mercantor Partners, a private equity firm investing in convenience and energy distribution and a member of the Gulf Board.

FuelsMarketNews.com

Not So Fast on that High Octane Fuel Proposal We live in a new age of abundant

fossil fuels from the fracking process that remains buffeted by a range of forces that continue to push even higher fuel efficiency, carbon reduction and the inclusion of biofuels to power transportation. For many drivers, particularly those in the United States, there is an often-conflicting desire for cheap fuel, larger vehicles and more powerful engines and performance. Carbon reduction and efficiency do not seem to be as important in vehicle purchasing behavior. Is there a single solution that can satisfy all of these desires?

“

by Keith Reid

”

FMNMagazine

Higher octane ratings allow for higher compression (typically in smaller turbocharged engines) that generates more power, torque and eﬃciency per gallon. Further, a primary source of octane is ethanol, and with this solution comes the promise of ethanol volumes that should exceed Renewable Fuel Standard ethanol volume requirements.

FuelsMarketNews.com

FUELS & SUPPLY A suggestion that I first started to seriously explore when exposed to it in detail at a 2015 Fuels Institute meeting seems, on the surface, to go a long way toward providing such a solution—a single high-octane fuel mated with engines specifically designed to provide optimal performance on that fuel. Higher octane ratings allow for higher compression (typically in smaller turbocharged engines) that generates more power, torque and efficiency per gallon. Further, a primary source of octane is ethanol, and with this solution comes the promise of ethanol volumes that should exceed Renewable Fuel Standard (RFS) ethanol volume requirements. A highly active roundtable discussion at the 2015 meeting involving representatives from the California Air Resources Board (CARB), oil companies, biofuels organizations, automakers, fuel retailers and marketers identified a range of likely parameters that would have to be met for any new super fuel solution. Specifically, in addition to any mileage or carbon benefits, the new fuel would have to provide no loss in performance, no significant increase in cost to the customer or retailer and have backward compatibility to existing engines at introduction (or there would still have to be legacy fuels in circulation during a transition period). Several concerns were raised with this approach as applied to a high octane solution, a primary one being price. This would essentially be a super-premium, and as we know, premium involves a premium price that is generated by both market and production factors. The market factor would eventually be solved as over time it would become the majority dispensed fuel, but there would be a notable transition period. The production process should also see some room for price improvement, but would it ever get down to the cost of regular? And if not, would the efficiency and performance gains equal out the higher costs? The answers are still out on those questions, but the current conventional wisdom is “not quite.” However, in retrospect few expected fracking production costs to be as low as they are today.

likely be problematic for retailers and marketers.

The second issue with the proposed solution was the actual ethanol content. This new fuel provides the possibility of ethanol content well beyond the RFS. We are currently at a point where somewhat over 10 percent ethanol content (E10) is supported. There is a push from the ethanol lobby and some marketer/retailer sectors for E15. This new fuel would likely fall into the 95 – 100 octane range and likely involve E20 – E30 or even E40. For the ethanol industry more is always better as long as supply can keep up. For retailers and marketers E25 has the least issues with compatibility and warranties. The oil industry would be happy with E0.

The Ethanol Industry Was More Than On Board As noted, the high octane fuel approach potentially has a lot of appeal to ethanol producers who want to push volumes beyond E10 – E15, as the lowest initial considerations easily doubled those volumes. This was exemplified by the publication in March 2017 of a standard for the proposed high-octane fuel: ASTM D8076 – 17, Standard Specification for 100 Research Octane Number Test Fuel for Automotive Spark-Ignition Engines. There was particular excitement throughout the ethanol industry over blends as high as E50, though such extreme blends would FMNMagazine

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“While the Corporate Average Fuel Economy-Greenhouse Gas (CAFE-GHG) program has resulted in meaningful progress with respect to fuel efficiency and GHG emissions, this progress will plateau unless EPA increases the octane rating of fuel used in future engines,” said Brian Jennings, who was American Coalition for Ethanol Executive Vice President at the time and who now is the organization’s CEO. “With a blendingoctane rating of 113, American-made ethanol is the lowest-cost, low-carbon source of octane on the planet.” The excitement continued with presentations at a range of industry conferences and as new opportunities materialized. For example, when in April 2018 the Trump administration announced a likely revision of the aggressive Obama-era CAFE mileage standards, the high-octane approach was presented as an alternative that must be considered in any revision. Former Renewable Fuels Association (RFA) President and CEO Bob Dinneen offered the following statement: “For too long, our light-duty vehicle fuel economy and GHG emission regulations have focused exclusively on the vehicle. We have repeatedly encouraged EPA, NHTSA and CARB to also consider the important impact of fuels on fuel economy and emissions. Fuels and engines work as integrated systems, and we have provided mounds of evidence that high-octane, low-carbon ethanol blends in optimized engines would be the lowest-cost means of achieving compliance with future fuel economy standards. We are glad to see EPA took notice of that information, and we again urge EPA and NHTSA to use the upcoming rulemaking to establish the roadmap to broad commercialization of high-octane fuels in optimized internal combustion engines. As we pointed out in previous submissions to the agencies, higher octane fuel would unleash and enable a wide pallet of low-cost engine technologies that offer proven fuel efficiency and GHG emission improvements at a low cost for consumers.”

“

FUELS & SUPPLY

”

POLICY BRIEF: Not So Fast on that High Octane Fuel Proposal

“Since ethanol is one of the lowestcost sources of octane in many areas of the country, a transition from the RFS beginning in 2023 to a national octane speciﬁcation creates new market opportunities for biofuel producers and gives certainty to reﬁning stakeholders.” Congressman Bill Flores

The Ethanol Industry Not So Onboard, Now

In addition, there are a range of requirements to prevent misfueling that would have an impact on retailers (nozzles and labeling) and automakers (fill ports). Automakers would have to produce vehicles compatible (and warrantied for) this fuel in 2023. Fuel retailers would not be forced to upgrade their fueling infrastructure except as done voluntarily to carry the fuel.

On November 21, 2018, the concept of a unified high octane solution made inroads into the legislative process. Congressman Bill Flores (Texas-17) and Congressman John Shimkus (Illinois-15) released a discussion draft of the 21st Century Transportation Fuels Act.

While capping the fuel at E20—twice as high as the ubiquitous E10 and a good step above the increasingly popular E15—would seem to be a notable win for ethanol producers, from a market perspective that is certainly not the case with the draft proposal. As the new RFA President and CEO Geoff Cooper noted in a response to the proposal, “…the draft bill would destabilize the considerable progress our nation has made toward greater energy security, economic vitality and environmental health. We simply cannot support eliminating the RFS program, as the draft envisions, without a much stronger signal to the market that ethanol’s role in our fuel supply will continue to grow.

“Much has changed in the markets for vehicles and fuels since the Renewable Fuel Standard (RFS) was established in 2005 and subsequently expanded in 2007. We have learned from robust stakeholder input through hearings, roundtables and meetings that higher octane fuels can bring increased fuel economy and performance for next generation engines. Since ethanol is one of the lowest-cost sources of octane in many areas of the country, a transition from the RFS beginning in 2023 to a national octane specification creates new market opportunities for biofuel producers and gives certainty to refining stakeholders. Most importantly, the draft legislation preserves consumer choice and optimum fuel and vehicle costs for more efficient transportation for future decades,” Flores said in a release.

“Even though ethanol is far superior to other octane boosters in terms of cost, greenhouse gas emissions, air quality, health effects and other factors, a 95 RON standard —when paired with elimination of the RFS conventional renewable fuel requirements—would not result in increased market opportunities for ethanol. RFA strongly believes a high octane fuel standard can work in concert with—not in conflict with—the RFS.”

On December 11 the act was discussed in a public subcommittee meeting. Support from agribusiness and the ethanol industry was far more subdued with this specific proposal. The overarching component was basically replacing the RFS with a high octane fuel standard based on 95 research octane number (RON) and adjustments by fuel retailers/ marketers and automakers to make that possible. It would cap out at a fueling industry favorable maximum of E20 with appropriate Reid vapor pressure (RVP) waivers.

Growth Energy CEO Emily Skor expressed similar concerns during the meeting: “Only by coupling a stable RFS with a significant boost in octane from a mid-level ethanol blend can consumers realize significant cost savings, increased engine efficiency and substantial environmental benefits. Unfortunately, this draft as proposed will lead to reduced blending of cleaner biofuel and it will raise costs significantly for American drivers.”

Between 2020 and 2022 conventional biofuel (primarily corn ethanol) would be capped at 15 billion gallons to meet RFS volume obligations. That would sunset in 2023 and advanced biofuels like biodiesel, cellulosic biofuels and biomass diesel would be plateaued at 2022 levels until 2033 when those provisions would sunset. States would not be able to go their own way in setting different standards for the fuel. FMNMagazine

So, essentially, why settle for E20 and leave E30 or E50 or beyond on the table? And while E20 was presented as a maximum blend, it was not set as the exact requirement. 10

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FUELS & SUPPLY

POLICY BRIEF: Not So Fast on that High Octane Fuel Proposal

The ethanol industry observed some not-so-obvious threats in the proposal, as outlined by ACE’s Jennings: “In fact, while the legislative draft implies support for E20 blends, a recent study commissioned by the Energy Information Agency (EIA) concluded refiners could easily meet a 95 RON standard using just 10 percent ethanol,” he noted during the meeting. “If the goal of the legislation is to increase the octane of motor gasoline, refiners cannot be allowed to insist on man-made limits just because they prefer not to use ethanol, which happens to be the lowest-cost and lowest-carbon source of octane on the planet. There may be ideas in the legislative draft which, in isolation, might seem appealing, but the net effect of the entire legislative package would be very harmful to the ethanol industry and farmers who need pro-growth policies.”

“ ”

industry, U.S. energy security has meaningfully improved and petroleum imports have declined. Ethanol and other biofuels have only marginally contributed to these goals. According to the Department of Energy’s EIA, the RFS “played only a small part in reducing projected net import dependence.” NACS and SIGMA presented a combined response that was primarily concerned with clarifying retail equipment issues involving nozzles to prevent misfueling and dispenser warranties and replacement. Price posting requirements were also discussed. NATSO focused on the future of biodiesel and the associated volume issues with the sunset of the RFS. Understandable, given that many of its members who are, of course, high volume diesel retailers have established business models centered on biodiesel blends. The same concerns were addressed by the National Biodiesel Board.

As a result of technological advances by the domestic oil and natural gas industry, U.S. energy security has meaningfully improved and petroleum imports have declined. Ethanol and other biofuels have only marginally contributed to these goals.

Same Old Song and Dance This current battle is hardly a new situation. Since the disastrous gasohol efforts in the 1970s, agribusiness has worked to get ethanol in the fuel supply at the maximum level politically and functionally possible. The oil industry has vehemently opposed ethanol at any significant level. Perceived wins have been undercut by loopholes of the type ethanol producers are wary of with these latest efforts. Take MTBE, for example, the first major issue I covered in the industry around 2000. It provided an eye-opening insight in to the realm of political combat on the regulatory and legislative fields of battle.

What Other Impacted Parties Think

In a nutshell, the agricultural lobby helped pushed through an oxygenate mandate (requiring an additive with high oxygen content) in the 1990 Clean Air Act that would provide cleaner combustion to meet environmental goals. The supposition was that ethanol would be that oxygenate. The oil industry had other ideas and introduced methyl tertiary butyl ether (MTBE) as an in-house produced alternative.

Refiners generally supported the proposal with some caveats. In the response from American Fuel & Petrochemical Manufacturers the most notable points were that the standard must be limited to 95 RON and that Congress should provide liability protection for retailers and refiners that comply with misfueling regulations. Congress should require EPA and FTC to evaluate and establish misfueling and labeling regulations to prevent misfueling of new vehicles with sub-octane fuel tied to a public education campaign.

All was fine until MTBE started showing up in groundwater from leaking underground storage tanks. While it was never scientifically proven to be a significant health concern, it could be tasted at very low levels which was sufficiently off-putting to the public that a phase out began shortly afterward with ethanol as its replacement. After all, many people already mix ethanol with water in a cocktail glass and then willingly consume the combination.

For American Petroleum Institute, just about any press release on ethanol since the passage of the RFS expresses their position. Here is part of what they had to say on this proposal: We believe that the RFS program is outdated and broken, and we support bipartisan efforts in Congress to sunset the program. The key assumptions made in 2007 when the Energy Independence and Security Act (EISA) was enacted have since proven in conflict with commercial and technical realities. Congress expected 1) continued, significant growth in fuel demand, 2) increased reliance on imported petroleum, and 3) rapid development of next-generation advanced and cellulosic biofuel technologies. None of these three expectations came true, which is why the current RFS is incongruent with today’s reality. As a result of technological advances by the domestic oil and natural gas FMNMagazine

The blow up of the MTBE issue stunted the credibility of oil companies on such issues while providing momentum and a natural launching ramp to get even more ethanol in gasoline, and the RFS moved through Congress shortly afterward to be signed by then-president George W. Bush. And so it goes. n

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John Eichberger

John is the Executive Director of the Fuels Institute. Founded by NACS in 2013, the Fuels Institute is a nonprofit tax-exempt social welfare organization under section 501 (c) (4) of the Internal Revenue Code. It is dedicated to evaluating issues affecting the vehicles and fuels markets. The Fuels Institute commissions comprehensive, fact-based research projects that are designed to answer questions, not advocate a specific outcome of interests to industry stakeholders and policymakers considering legislation and regulations.

What will happen on electric vehicle policy (along with all other policies) remains to be seen as the Congress enters into a period that most anticipate will be rife with political battles between the chambers and the White House. FMNMagazine

FuelsMarketNews.com

Reversal of Misfortune: Oil in the U.S. Part 1

by Nancy Yamaguchi, PhD

The United States is emerging as a regional and global powerhouse in the petroleum sector. It was not all that long ago that the U.S. was expected to become more and more heavily dependent on imported oil. Forecasts of U.S. crude production all were pointing down. Production from mature domestic oilďŹ elds was declining, and the most oil-prospective areas remaining were in diďŹ&#x192;cult or environmentally sensitive areas. On the other side of the equation, forecasts of oil demand continued to rise, resulting in a widening gap between supply and demand. This trend seemed the most likely for the future.

FMNMagazine

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FUELS & SUPPLY

“ ”

It is rare to witness a reversal of fortune on the scale of what has happened in the U.S. oil industry since then. The advent of hydraulic fracturing and horizontal drilling brought the “Shale Boom.” This has transformed the U.S. into one of the world’s top three oil producers, in the company of Saudi Arabia and Russia. The U.S. Energy Information Administration (EIA) reports that U.S. crude production rose to an average of 11.24 million barrels per day (mmbpd) during the third quarter of 2018. This places the U.S. in the number two spot, since the International Energy Agency (IEA) lists third quarter 2018 oil production from Saudi Arabia at 10.43 mmbpd and Russian output at 11.65 mmbpd.

It is rare to witness a reversal of fortune on the scale of what has happened in the U.S. oil industry.

Saudi Arabia and Russia currently are working to cut oil production to reduce global oversupply and strengthen prices. U.S. producers are under no such compulsion, and their output is expected to rise in 2019. The EIA forecasts that U.S. production will average 11.9 mmbpd in 2019. Already, there have been times when U.S. crude output has placed it in the number one spot globally, and there appears to be little reason to doubt that it could not claim this top spot on a more sustained basis in coming months.

FMNMagazine

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FUELS & SUPPLY

A Reversal of Misfortune: Oil in the U.S.

“ ”

We are calling this “A Reversal of Misfortune.” There is an element of judgement here: Is the reversal good fortune, bad fortune, or unknowable? In some countries, abundant resources have been detrimental to economic development. This is common enough to be known as “the resource curse.” Resource prices can swing wildly, making revenue projections impossible. If governments rely on a resource extraction economy, tax revenues can spike or plunge, possibly destabilizing entire regimes. When Norway discovered oil in the 1960s, the government declared ownership of the reserves, and many Norwegians worried that oil would ruin their government and their country. The fact that it did not was attributed to the presence of an already-established economy, a competent and forward-thinking government, and strong rule of law. The U.S. may share some of these qualities, but perhaps more importantly, there is no national oil company. In the U.S., the oil industry is composed of numerous, longestablished, companies. Also, the economy already was large and diverse before oil production began to rise again. The “resource curse” in the U.S. could take another shape, however, since the presence of abundant domestic oil may lengthen the fossil energy era and stiﬂe investment in other energy technologies and prevent us from cutting carbon emissions. Indeed, we may be on the doorstep of innovations that will make fossil energy obsolete. Perhaps the shale boom will end because oil demand collapses. In that case, the resources will remain in the ground.

The presence of abundant domestic oil may lengthen the fossil energy era and stiﬂe investment in other energy technologies.

amounting to a decrease of 1.9% per year over the ﬁfteen-year period. The U.S. required 7.3 mmbpd less imported crude than had been expected. To place this volume in context, Figure 1 compares the reduction in U.S. crude imports with the volume of crude exports by each OPEC country in 2017. The U.S. cut its projected crude import requirement by 7.3 mmbpd, a volume greater than the total exports of every single OPEC country, including Saudi Arabia, which exported 7 mmbpd in 2017. Obviously, the impact on the global oil market has been massive.

From a purely pragmatic point of view, the author’s perspective is: First, oil is valuable. It contains so much easily accessible energy, and it is so thoroughly entrenched in the modern world that it will take time to dethrone it. Second, that it is better to have it and not need it, than to need it and not have it. Good, bad or indiﬀerent, the reversal in the U.S. oil balance has been astonishing. How signiﬁcant are the impacts on trade?

Figure 1: Reduction in forecast U.S. crude imports vs. OPEC country exports (mmbpd)

Forecasts of U.S. Crude Import Requirements, Then and Now Early each year, the EIA publishes its Annual Energy Outlook (AEO.) The AEO is the nation’s oﬃcial long-term forecasting program. It is a massive data-gathering and computer-modeling exercise, covering a full range of energy supply, disposition, demand and price issues and projecting what might happen in coming decades given pre-determined scenario assumptions. The country’s oil sector has changed so dramatically that projections of the future are now wildly diﬀerent than they once were.

Source: OPEC exports per OPEC Annual Statistical Bulletin 2018, AEO2005 forecast and 2017 actual imports per U.S. Energy Information Administration

This chart presents a snapshot of 2017, but the projected change did not stop there. Figure 2 plots the AEO2005 forecast of the national crude import requirement to the year 2025, when the U.S. was expected to import 16.12 mmbpd of crude oil. Note the huge divergence between the AEO2005 forecast and the actual import volumes from 2002 through the ﬁrst three quarters of 2018, as reported by the EIA.

The AEO2005 report noted that the U.S. crude oil imports had risen from 9.14 mmbpd in 2002 to 9.95 mmbpd in 2004. AEO2005 forecast an increase to 14.16 mmbpd of imports in the year 2017. This meant that oil imports were expected to rise by 3% per year from 2002 to 2017. Since then, the actual data now reveals that the import requirement fell to 7.97 mmbpd in 2017, FMNMagazine

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A Reversal of Misfortune: Oil in the U.S.

Figure 3: Reversing the Downward Slide in Long-term U.S. Crude Production, kbpd

Moving forward to the AEO2018 report, its forecast now calls for a crude import requirement of only 6.0 mmbpd in 2025, nearly 10.12 mmbpd less than what was projected by AEO2005. As time moves forward, U.S. crude import requirements are projected to fall below 6 mmbpd and to remain in this neighborhood for over thirty years. Imports are projected to be 5.91 mmbpd in the year 2050—a far cry from where they might have been if the trend seen in AEO2005 had continued. Extrapolating the AEO2005 line would have placed U.S. crude import requirements at over 33 mmbpd in the year 2050. Presumably, this type of demand would have stimulated investment by other oil producing countries, and it would have supported a much higher oil price than is seen today. But it is worth noting that 33 mmbpd is more than the sum of all OPEC exports in 2017.

Figure 2: Major Reduction in Forecast of U.S. Crude Imports Source: Energy Information Administration (EIA), 2018 data are Q1 – 3 average

Figure 4 displays the tremendous variability in the number of active oil and gas drilling rigs in the U.S. from 2003 through 2018. Oil prices were rising during the 2003 – 2008 period, and steady growth can be seen in the number of active rigs. But prices spiked in 2008, and the U.S., along with many other countries, slid into the Great Recession. The rig count was cut by more than half from over 2,000 in the summer of 2008 to less than 900 by mid-2009. The recession forced many companies to declare bankruptcy. The second dramatic downturn in the U.S. active rig count can be seen after 2015. The turnaround in U.S. production began to erode the market share of OPEC exporters. Saudi Arabia had been cutting its production to keep the market balanced, but eventually this became a thankless task. Saudi Arabia began to ramp up production and launched a price war.

Source: Energy Information Administration (EIA), AEO 2005, AEO2018, and 2002-2018 (Q1 – 3) data

Reversing the Downward Slide in U.S. Oil Production

When the rig count began to recover in 2010, the growth was in horizontal drilling. In 2003, only around 6 – 7% of U.S. rigs were horizontal rigs. By 2010, horizontal rigs accounted for over half of the rig count. As of the ﬁrst week of January 2019, 88% of the active rigs in the U.S. were horizontal rigs.

As the U.S. becomes more and more of a powerhouse in the global oil market, is there anyone still among the living that worked in the early years of the industry? Figure 3 presents the long-term trend in U.S. crude production, beginning in the year 1900—one hundred and nineteen years ago. The U.S. was indeed the world’s oil superpower back then. Oil production grew from 0.174 mmbpd in 1900 to 9.637 mmbpd in 1970, a growth rate of 5.9% per year. This was the peak year of output. Production was sustained for a time as Alaskan crudes began to replace declining volumes from the lower 48 states, but by the mid-1980s, production began to decline steadily. Oil output dropped below 5 mmbpd in 2008.

Figure 4: Active Rigs and the Rise of Horizontal Drilling

For decades, our forecasts of oil production assumed that this downward trend would be permanent. The Shale Revolution turned this around. Oil production of 4.998 mmbpd in 2008 jumped to 10.761 mmbpd during the ﬁrst ten months of 2018. This astonishing growth equates to an increase averaging 8% per year. Year 2018 output has smashed the prior record of 1970, which had held for forty-eight years. Reversing the downward trend was not a simple matter. Drilling for oil and gas is sensitive to price, time and location. FMNMagazine

Source: Baker Hughes

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A Reversal of Misfortune: Oil in the U.S.

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A Reversal of Misfortune: Oil in the U.S.

One of the most prolific and famous oil-producing regions is the Permian Basin in Texas. Figure 5 shows the rise and fall in the active rig count between 2007 and 2018. The rig count dropped from 265 in 2008 to 137 in 2009, in response to the Great Recession. The count then climbed to a peak of 536 rigs in 2014. It collapsed to 181 in 2016 in response to the Saudi-led oil price war. These were difficult years for the operators, but during this time, production efficiency soared. In 2007, each rig averaged 60 barrels per day of oil. When the rig count fell, the less-efficient rigs left the field first, and production per rig doubled to 123 bpd in 2010. Drilling efficiency rose to 588 bpd per rig in 2016 before leveling off. In 2018, the rig count had recovered to 463 active rigs, with an average production of 608 bpd each.

Figure 5: Permian Basin Rigs and Production per Rig

The export restrictions finally were eliminated at the end of 2015. As Figure 6 illustrates, U.S. crude exports were unleashed beginning in 2016. Crude exports skyrocketed to 591 kbpd in 2016, jumped to 1158 kbpd in 2017 and rose to an average of 1843 kbpd during the first three quarters of 2018. The U.S. began shipping crude to far-flung destinations. During the 2000 – 2015 period, Canada usually was the destination for 95 – 100% of U.S. crude exports. In 2016, this share fell to 61%. It dropped to 31% in 2017, and it fell to just 19% during the first three quarters of 2018. Although crude exports to Canada remain significant, during the first three quarters of 2018, the Asia-Pacific region has been the destination for nearly 45% of U.S. crude exports. China, Taiwan, India, South Korea and Japan have become major customers. Europe and other destinations accounted for 32% of U.S. crude exports, with large volumes being shipped to the United Kingdom, Italy and the Netherlands.

Number of Rigs

Production per Rig (bpd)

Figure 6: Spread of U.S. Crude Exports, mmbpd

2007

2009

2011

2013

2015

2017 2018

Source: Energy Information Administration (EIA), and Baker Hughes

The U.S. Becomes a Major Oil Exporter During the 1970s, the U.S. placed restrictions on exports of domestic crude oil, the idea at the time being that this would provide some sort of supply security. Certain exports were permitted, including exports to Canada, exports of crude from Alaska state waters and a specified volume of California heavy crude. As U.S. production began to rise, the export restrictions placed artificial barriers to trade, and oil from key shale plays created localized surpluses, driving down prices and creating inefficiencies.

“ ”

1993 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018*

Source: Energy Information Administration (EIA), 2018 data are Q1 – 3 average

The U.S. also has an even larger role in exports of refined products, as shown in Figure 7. During the years when crude production was growing and restrictions were placed on its export, U.S. refineries with access to the inexpensive new crudes were running at very high rates of utilization to process the crude and export refined products instead. Product exports more than quintupled from around 1 mmbpd in 2003 to 5.5 mmbpd during the first three quarters of 2018. The destinations for these exports also are diverse. During the first three quarters of 2018, Canada was the destination for

Although crude exports to Canada remain significant, during the first three quarters of 2018, the Asia-Pacific region has been the destination for nearly 45% of U.S. crude exports.

FUELS & SUPPLY

“ ”

A Reversal of Misfortune: Oil in the U.S.

11% of U.S. refined product exports, while other Western Hemisphere countries accounted for 52% of U.S. exports. Mexico imported nearly 1.2 mmbpd of U.S. refined fuel. Other key destinations included Brazil, Ecuador, Peru, Panama, Venezuela and Argentina. Asia-Pacific countries accounted for 19% of U.S. product exports, including Japan, China, India, Indonesia and Singapore. Europe and other countries accounted for 18% of exports, including the Netherlands, the United Kingdom, Turkey and France.

Figure 7: U.S. Reﬁned Product Exports Are Growing, mmbpd

Hemisphere

It is just as diﬃcult to believe that the U.S. is emerging once again as the world’s number one oil producer, with crude oil exports and reﬁned product exports growing and reaching consumers around the world.

Source: Energy Information Administration (EIA), 2018 data are Q1 – 3 average

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A Reversal of Misfortune: Oil in the U.S.

Conclusion: A Reversal of (Mis)fortune

Fossil energy development and utilization place large tolls on the environment. Hydraulic fracturing is water-intensive, chemical-intensive and reinjection of ﬂuids has caused seismic activity in some areas. Many believe that the fossil age is coming to a much-needed end at last. If U.S. oil production had continued to sink, and imports continued to soar, global oil prices would be higher today, and alternatives would be more competitive. The Shale Boom has delayed that. We can only reiterate that it is better to have it and not need it, than need it and not have it. If technological advancements make fossil energy obsolete, it can be left underground. n

The U.S. oil market has gone through some major cycles. It is difficult to believe that, a century or so ago, the U.S. was the world’s largest producer of oil. The public’s mind is more likely to recall the days of oil price spikes and perceived shortages. It is just as difficult to believe that the U.S. is emerging once again as the world’s number one oil producer (it most likely already occupies this spot), with crude oil exports and refined product exports growing and reaching consumers around the world. Contrary to some sensationalist headlines, the U.S. is not a net exporter of crude oil. During the January – October period of 2018, the U.S. produced 10.76 mmbpd of crude, exported 1.89 mmbpd of crude and imported 7.85 mmbpd of crude. Nonetheless, this is a huge shift from where the country might have been. The AEO2005 forecasting exercise projected that crude imports would exceed 16 mmbpd in the year 2025. This projection was slashed to 6 mmbpd in the AEO2018 report. The impact on the global market is huge. Essentially, the U.S. as a customer was projected to buy 10 mmbpd of crude, and it has left the market, and the volume left behind is as much as the largest producers (the U.S., Russia and Saudi Arabia) can produce.

READ MORE at FuelsMarketNews.com

Dr. Nancy Yamaguchi Nancy is an author and petroleum industry expert specializing in the advanced analysis of energy markets.Dr. Yamaguchi is the President of Trans-Energy Research Associates, Inc. focusing on a wide spectrum of fuel related issues such as economics and the environment. She possesses a strong interest in global oil industry, including supply, demand, trading trends, as well as transport, refining, product blending, alternative and reformulated fuels, product quality and price behavior. Dr. Yamaguchi can be reached at nyamaguchi@trans-energy.com

The resurgence of U.S. oil is a massive reversal of (mis)fortune, though in fairness, we cannot say that it is all good fortune.

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Association Leaders Look Back at 2018 and Ahead to 2019 As the new year was arriving Fuels Market News reached

by Keith Reid

out to association leaders throughout the industry to get some feedback on what their organizations accomplished in 2018 and what they anticipated for 2019. FMN would like to thank those who were able to respond in a timely manner during the busy holiday season.

National Association of Convenience Stores Henry Armour, NACS President & CEO

NACS advances the role of convenience stores as positive economic, social and philanthropic contributors to the communities they serve. The U.S. convenience store industry, with more than 154,000 stores nationwide selling fuel, food and merchandise, serves 160 million customers daily—half of the U.S. population— and has sales that are 10.8% of total U.S. retail and foodservice sales. NACS has 2,100 retailer and 1,750 supplier members from more than 50 countries.

FMN: What would you consider the association’s major accomplishments in 2018?

If there were a theme to 2018, it would be strength in numbers. Despite all the disruption that is redefining the broader retail industry and all the issues—both legislative and regulatory—that threaten our industry, 2018 was another strong year for our industry. And much of this strength can be attributed to how our industry works together, both through NACS and with other groups, to find common ground for issues and concerns related to the industry. NACS’ biggest accomplishments in 2018 are not just about the end game of “winning” a vote or helping to define an issue but are about the process of working together as an industry—or with other industries—to define how we can accomplish more together. Here are three examples: n To address payment card and technology standards, we, along with other retail trade groups and debit networks, created the Secure Payments Partnership (securepaymentspartnership.com), an advocacy group focused on promoting security across the U.S. payments system. FMNMagazine

n To address payment costs, we worked with Congress on the 2018 Farm Bill that includes a ban on processing fees on electronic benefits transfer (EBT) transactions and reiterates the ban on interchange fees. n In response to the U.S. Food and Drug Administration’s announcement to restrict the sale of flavored e-cigarettes to adult-only stores, we met with the White House Office of Public Liaison and the Domestic Policy Council, as well as the FDA and shared our concerns about the FDA’s action and offered policy proposals. And, our members responded when we asked them to make their voice heard: Convenience retailers sent more than 5,000 letters to Capitol Hill about the issue. These are high-profile examples of the work we do every day, behind the scenes, to tell our industry’s story to legislators, the media and other key opinion-leaders. And it’s something we will continue in 2019, whether these issues or many others, including a litany of fueling issues.

FMN: What are the top

initiatives and issues NACS expects to address in 2019? While we know that there are many issues that could be upon us in 2019, whether related to electric vehicles, new technologies that continue to redefine convenience or how legalized sports betting or marijuana sales could play a bigger role in our channel, there is one thing that we do know. Disruptions to traditional business models are all around and that forces all businesses to continue to innovate and find new ways to stay ahead of the competition. The good news is that you don’t have to do it alone. We can serve as your voice and there is strength in numbers. We all do better when we are all engaged. FuelsMarketNews.com

FUELS & SUPPLY

FMN: Why should a convenience

FMN: What are the top

store operator consider NACS membership or become involved with NACS activities?

initiatives and issues NATSO expects to address in 2019? As the association representing truckstops and travel plazas, we pay particular attention to infrastructure financing, truck fuels policies and other issues that uniquely affect our industry. Our members have a particular interest in the safe and efficient interstate movement of freight and people, since most NATSO locations operate at major highway interchanges and serve professional drivers and other interstate travelers. We’ve led efforts to support smart infrastructure investment and oppose poor financing schemes such as road tolling and commercial rest areas. As the association representing truckstops and travel plazas, we pay particular attention to infrastructure financing, truck fuels policies and other issues that uniquely affect our industry. Our members have a particular interest in the safe and efficient interstate movement of freight and people, since most NATSO locations operate at major highway interchanges and serve professional drivers and other interstate travelers. We’ve led efforts to support smart infrastructure investment and oppose poor financing schemes such as road tolling and commercial rest areas.

Most of all, the power of NACS is about how we as an industry come together to make each other better. A record 25,000-plus attendees were at the 2018 NACS Show to learn new ideas in sessions, see new products on the expo floor and connect with each other during networking opportunities. Those opportunities to deliver knowledge and connections, plus advocacy, is something that we do at other focused events throughout the year, whether our acclaimed Leadership Education Programs, our State of the Industry Summit or our Global Summits in Europe and Asia. These are more than events; they are opportunities for members to learn about issues on a global scale. And, that’s important because issues around the world are in varying stages of their life cycle. In Asia, technology defines convenience to a much greater extent, while in Europe, fresh is the focus. Both broad trends will have a profound impact on how you go to market.

NATSO

In 2019, NATSO will continue to advocate for policies that will support a diverse array of fuel supply options. Such policies, which include the Renewable Fuel Standard and the Biodiesel Tax Credit, lower our members’ cost of goods sold. We are actively pushing Congress to extend the Biodiesel Tax Credit, which expired at the end of 2016. The expiration of that credit has created a lot of market uncertainty and makes it difficult for fuel retailers to invest and plan for the future.

Lisa Mullings, chief executive for both NATSO and the NATSO Foundation NATSO has been representing travel plaza and truckstop owners and operators for over 50 years and pursues a clear mission: to advance the success of truckstop and travel plaza members by delivering solutions to members’ challenges and achieving the public policy goals of the truckstop and travel plaza industry. It represents more than 1,700 travel plazas and truckstops nationwide, owned by over 200 corporate entities.

We will also continue urging the Environmental Protection Agency to halt its practice of granting waivers exempting small refineries from their obligations under the Renewable Fuel Standard. EPA has the authority to grant waivers exempting small refineries from their obligations under the RFS if they can prove that it would cause them a disproportionate economic hardship. But in 2018, EPA granted an unprecedented number of these hardship waivers, even to refineries that are owned and operated by some of the most profitable refining companies in the world. Without a transparent process to guide the assessment of these small refinery waiver requests, the exemptions will continue to undermine the law’s intent and decrease demand for biofuels.

FMN: What would you consider the association’s major accomplishments in 2018?

NATSO recently launched the Alternative Fuels Council to help fuel retailers leverage the resources necessary to learn about and incorporate alternative fuels into their supply offerings. The Council already has put a number of compelling products on the market, including a RIN Management Service that helps fuel retailers that blend and sell renewable fuels to more efficiently participate in the Renewable Fuel Standard (RFS) program and manage their Renewable Identification Numbers (RINs).

FMN: Why should a truckstop

or travel plaza operator consider NATSO membership or become involved with NATSO activities?

Bringing new fuels to market is a complex and time-consuming task and through the Alternative Fuels Council retailers have access to highly skilled professionals who can help them expedite the process while also accurately meeting their compliance needs. On the policy side, early in 2018, Congress passed legislation providing for a retroactive biodiesel blenders’ tax credit for 2017, marking a victory for our industry and allowing fuel retailers to sell biodiesel at a price that is cost competitive with gasoline and diesel. NATSO also beat back plans by the Administration to increase interstate tolling and commercialize rest areas. FMNMagazine

NATSO serves truckstops, travel centers and other diesel fuel retailers exclusively through advocacy, information and collaboration. The Alternative Fuels Council will certainly continue to be a priority focus for us this year as we seek to remove the hurdles that stand in the way of many fuel retailers from entering the 35

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FUELS & SUPPLY

Association Leaders Look Back at 2018 and Ahead to 2019

alternative fuels markets. One of the things of which I’m most proud is that whenever we engage with our members, we provide solutions that translate into real dollars without having to spend a lot of capital. All of our members, for example, have an opportunity to participate in our retail profitability program. NATSO visits member locations to provide expert advice on site/store layout, merchandising and other aspects of their operations. We do the hard digging, and we leave them with actionable, executable ideas that help increase their profitability with little or no money. While this is something we’ve been doing for several years, we are planning to increase our resources to reach more of our members because it really does improve their bottom lines.

PMAA

Rob Underwood, PMAA President The Petroleum Marketers Association of America is a bit different from the traditional industry association. PMAA is a federation of 47 state and regional trade associations representing approximately 8,000 independent petroleum marketers nationwide. When a petroleum marketing company joins the state association, that automatically qualifies them as PMAA member companies.

FMN: What would you consider

the association’s major accomplishments in 2018?

Last year was a busy one for the association. Some quick accomplishments from 2018: n EPA approved PMAA’s low liquid level integrity test as an alternative method for containment sump testing that is required under the 2015 federal underground storage tank (UST) regulations. PMAA’s alternative test method will significantly reduce reoccurring sump testing compliance costs for tank owners. PMAA continues to work with ASTM and other groups to develop additional compliance cost saving tests that do not require introducing water into the sump and spill bucket. n PMAA continued to lead the way in disaster response efforts by reforming the waiver process, clearing regulatory hurdles, minimizing delays at weigh stations and speeding wait times at water-borne terminals. PMAA also established the PMAA Disaster Fuel Response Program, a critically necessary link between marketers available to provide fuel to disaster areas and those in need of such fuel. n PMAA protected marketers at ASTM by voting against efforts to place the point of compliance for fuel quality at the retailer, which potentially would require retailers to test fuel instead of terminal operators to avoid potential fuel related liability. n PMAA secured a 10-year reauthorization of the National Oilheat Research Alliance (NORA), which helps the heating fuels industry with professional education, improving energy efficiency and safety and research consumer education. FMNMagazine

n PMAA worked to keep the doubled estate tax exemption in place and making sure the step-up in basis (which provides that there is no capital gains tax due from a decedent) remains in place.

FMN: What are the top

initiatives and issues PMAA expects to address in 2019? Many of the issues PMAA worked on in 2018 will be key issues for petroleum marketers in 2019: n PMAA filed a brief in the Visa and Mastercard swipe fee litigation now pending in U.S. District Court in New York. The purpose of the brief is to oppose any settlement of the case that shuts out branded marketers from filing claims against the $6.24 billion settlement fund. n PMAA filed comments in support of the Trump Administration’s efforts to pare back the Obama Administration’s costly corporate average fuel economy (CAFE) standard final rule that would likely require more electric vehicles (EVs) in the marketplace. PMAA highlighted multiple petroleum marketing concerns and the need to rewrite the rule to reflect marketplace reality. The Trump Administration has yet to issue a final rule. n PMAA continued to highlight concerns with the RFS and the need to reduce the corn ethanol mandate. While the Trump Administration has yet to reduce the mandate, it issued exemptions to refiners, which has indirectly reduced the mandate, providing for a level playing field in the marketplace and preventing an E15 mandate across the country. n PMAA submitted a proposal to the National Conference on Weights and Measures (NCWM) to require transparency in the marketing and branding of E15 fuels by requiring the term “E15” to be included in marketing of E15 such as “Unleaded 88 E15.” The proposal is on the agenda for the NCWM 2019 Interim Meeting. n PMAA participated in task groups addressing potential implementation issues regarding refiner efforts to move towards a 95 RON fuel which could potentially be required in new vehicles starting with the 2023 model year and ultimately replace today’s 87, 89 and 91 octane fuel slate. This will be an ongoing issue for the next few years.

FMN: Aside from advocacy

legislative and regulatory initiatives, what are some of the other benefits you provide your members and by extension, their members?? PMAA’s new credit card program with Worldpay will pay dividends to the petroleum marketing class of trade. Worldpay is offering petroleum marketers a very competitive card processing transaction fee of 0.029 cents with no hidden fees. 36

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FUELS & SUPPLY

Association Leaders Look Back at 2018 and Ahead to 2019 technical documents have been recognized by the EPA as sufficient to meet some of most important regulatory requirements: RP900: Recommended Practices for the Inspection and Maintenance of UST Systems, and RP1200: Recommended Practices for the Testing and Verification of Spill, Overfill, Leak Detection and Secondary Containment Equipment at UST Facilities.

PEI

Rick Long, Executive Vice President & General Counsel Like PMAA, the Petroleum Equipment Institute has some unique positioning as a trade association whose members manufacture, distribute and service petroleum marketing and liquid handling equipment. Founded in 1951, PEI represents more than 1,600 member companies in all 50 states and more than 80 countries. Members include manufacturers, sellers and installers of equipment used in service stations, terminals, bulk plants, fuel, oil and gasoline delivery, and similar petroleum marketing operations.

Our members also are monitoring EPA’s efforts to remove legal impediments to the year-round sale of E15. Currently, this higher-level ethanol blend cannot be sold in most of the country from June 1 to September 15 because the Clean Air Act places summertime restrictions on sales of highly volatile fuels. EPA has said it intends to issue a waiver that would open up year-round E15 sales. But getting from here to there is no easy task. Even with full legal authorization to sell the fuel, interested owners and operators still will have to show that their UST systems are compatible with the fuel. PEI distributors and service contractors can help make these determinations and, when necessary, assist with equipment upgrades and replacements. The association’s website (www.pei.org) also has a Component Compatibility Library to help owners and operators check the suitability of various manufacturers’ products for use with E15.

However, PEI is actively involved with the range of state and federal agencies in studying recommended practices and procedures for how petroleum equipment is used, which has direct impact on the equipment customers including retailers, marketers and commercial fuel buyers.

FMN: What would you consider the association’s major accomplishments in 2018?

FMN: Why should a distributor,

Several years ago, PEI made a commitment to engage more deeply in Latin America. In 2018, the momentum for that initiative accelerated, thanks largely to a core group of Latin American PEI members who are helping us develop our goals and strategy for this important region. To take one important metric, an increase in Spanish-language programming at the 2018 PEI Convention led to our highest-ever Latin American convention attendance. The PEI Board of Directors also authorized the hiring of a fulltime PEI staff person for Latin America—a move we believe will dramatically boost the services and expertise we can deliver to the region.

installer or equipment manufacturer consider PEI membership or become involved with PEI activities?

A shortage of service technicians continues to plague our industry. In the last couple of years, PEI has taken several steps to address this problem, including a series of recruitment videos, a skills assessment test and an entry-level service tech training course test. In 2019, we’ll release a more advanced, second-level service tech training course. The new course will include essentials on how a fueling station operates, with chapters on electrical basics, point of sale equipment, tanks, piping, hydraulics, dispensers, release detection, fuel quality and safety.

On the technical side, we released a new recommended practice destined to be one of the most consequential documents ever published by PEI—RP1700: Recommended Practices for the Closure of Underground Storage Tank and Shop-Fabricated Aboveground Storage Tank Systems. The timing of this publication couldn’t have been better. Thousands of USTs installed in response to the 1988 U.S. EPA UST regulations will soon reach the end of their 30-year warranty period and will need to be removed from service. Until now, owners, operators and contractors have faced a patchwork of often-inconsistent tank closure techniques across the country. RP1700 will foster coherent and sound closure practices that will help owners, operators and contractors remove and decommission USTs safely, appropriately and in an environmentally friendly manner.

We’ll also publish a new recommended practice on the design, construction, installation, operation and maintenance of liquid natural gas fueling (LNG) facilities. LNG is the fuel of choice for a growing number of heavy-duty commercial vehicle fleets. PEI has no agenda other than to be of service to those involved in fuel- and fluid-handling equipment. Whether your concern is safety, the environment, efficient operations or keeping current on the latest in innovation and technology, PEI provides the resources, experts and connections you need. We’ve been the leading source of information for the industry for 69 years, and we’ll continue to be so for many more decades to come. n

FMN: What are the top initiatives

and issues PEI expects to address in 2019?

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On the regulatory front, PEI remains focused on the states’ efforts to comply with the EPA’s 2015 federal UST regulations. Two of our FMNMagazine

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The United States appears less exposed to geopolitical risks affecting its oil supply than at any time since the relatively stable period preceding the widespread oil sector nationalizations of the 1970s. Energy prosperity in the U.S. contrasts with a more fraught period for traditional energy exporting states where geopolitical challenges have been compounded by fiscal stress and rising domestic energy demand. Source: Geopolitical Dimensions of U.S. Oil Security, Jim Krane and Kenneth B. Medlock III

Bottom Line:

The U.S. shale revolution has ramifications far beyond the general impact on U.S. fuel prices and other domestic issues. Internationally, it has dramatically reset paradigms in international relations that have been in place since the Nixon Administration.

at FuelsMarketNews.com

by Angela Wisdom

nderground (fuel) storage tank (UST) monitoring is a critical part of fueling operations for both commercial fueling and retail fuel operations. The creation and monitoring of tank and fuel sump alarms is critical to ensuring environmental safety and EPA regulation compliance.

As a leader in both tank gauge technology and alarm monitoring, InSite360 leverages both Veeder-Root ATG and FuelQuest experience to ensure fuel storage tank alarms are quickly resolved. The monitoring of gasoline, diesel and kerosene fuels helps fuel wholesalers and retailers improve their business. In analyzing over 160,000 alarms from over 15,000 fueling sites across the U.S., we have developed this list of the top 10 causes of UST tank and automatic tank gauge (ATG) alarms. A proper alarm management program can ensure rapid response to fuel-related environmental risks while also avoiding unneeded service technician calls.

2018 Top 10

Convenience Store Fuel Tank UST Alarms

FMNMagazine

Image courtesy Veeder-Root, ÂŽ2019

FMNMagazine

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RETAIL OPERATIONS

1 Sensor Fuel Alarm: A Sensor Fuel Alarm indicates that a fuel tank or line sensor located in a containment area is sensing a liquid, generally gas, diesel or water. Forty percent of these ATG alarms are remotely managed and resolved because investigations identify local events like water intrusion due to rain, which is a common trigger for this alarm. If the alarm cannot be resolved remotely, an authorized service technician will be dispatched to investigate the cause of the alarm and the integrity of the fueling system. Alarm Risk Areas: Environmental Compliance; Financial

2 UST Tank Overﬁll Alarm: A Tank Overfill Alarm alerts that the gasoline or diesel level in a storage tank has reached or exceeded a preprogrammed threshold of the tank’s capacity— usually ninety-five percent—and the tank is in immediate danger of overfilling. Typically, this alarm also triggers a shutoff to prevent spillage; this alarm is very likely due to a delivery either in progress or recently received. Most of these alarms can be remotely resolved by stopping the delivery in progress and preventing the tank from being overfilled.

3 PLLD Gross Test Fail Alarm: A PLLD (Pressurized Line Leak Detection) Gross Test Fail Alarm indicates that the line leak detection system has detected a line 40 FuelsMarketNews.com leak in excess of three gallons per hour. This alarm will also generate a SHUTDOWN ALARM if the system is programmed to shut down dispensers on a gross line fail. This is a critical condition that must be addressed immediately, and twenty-one percent require a dispatched technician, however, seventy-nine percent were remotely resolved by the Insite360 remote fuel management alarm team. Alarm Risk Areas: Environmental Compliance; Financial

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RETAIL OPERATIONS

2018 Top 10 Convenience Store Fuel Tank UST Alarms

4 Tank High Water Alarm: A Tank High Water Alarm identifies that the water probe has risen and reached the “High Water Limit” preprogrammed threshold. Because the water level exceeds the limit, water must be removed from the tank. Eighty-six percent of these alarms are resolved remotely once the level is assessed while fourteen percent require a truck roll. Alarm Risk Areas: Financial

5 Sensor High Liquid Alarm A Sensor High Liquid Alarm indicates that the monitored parameter in a tank’s interstitial reservoir or containment area has exceeded the preset threshold. Sixty-five percent of these alarms are resolved remotely whereas thirty-five percent require a dispatch to evaluate the tanks at the c-store, hypermarket or commercial fueling site. Alarm Risk Areas: Environmental Compliance; Financial

6 Tank Probe Out Alarm A Tank Probe Out Alarm displays that the probe has failed to provide a tank level reading (inventory) or the reading is unstable. Generally, this is flagged as a hardware failure caused by the probe itself and/or wiring into the console. Fifty-four percent of these alarms are resolved remotely with forty-six percent requiring an authorized service technician be dispatched to the gas station. Alarm Risk Areas: Environmental Compliance; Financial

7 Tank Sudden Loss Alarm: A Tank Sudden Loss Alarm warns that the in-tank ATG probe has noticed a decrease in fuel level beyond the programmed threshold during an idle

period. This alarm can be indicative of a fuel leak or of fuel theft. Eighty-five percent of these alarms are handled without dispatching a technician, however, the cause of fuel loss should be investigated. Alarm Risk Areas: Environmental Compliance; Financial

8 Sensor Open Alarm: A Sensor Open Alarm indicates that a probe sensor has stopped communicating to the ATG after being activated. The pressure sensor reading is less than -8 psi (55.16 kPa) and it can only be tested while the gas pump is running. When this alarm occurs, the gas pump stops dispensing if the site manager has programmed the Veeder Root TLS 450 or TLS350 ATGs to do so. Alarm Risk Areas: Environmental Compliance; Financial

9 Tank Delivery Required: A Tank Delivery Required indicates that the fuel level in the fuel tank has reached a preprogrammed threshold level based on the gas station’s need for a gasoline or diesel delivery. This level is set based on the size of the underground storage tank and how many gallons the site sells.

10 Tank High Limit Alarm: A Tank High Limit Alarm is an environmental compliance setting that shows that the product density in the tank has reached a preprogrammed threshold, usually ninety to ninety-five percent of tank capacity and indicates a danger of overfilling tanks. This threshold should not be exceeded to ensure that there is not accidental spillage.n

Angela Wisdom Angela Wisdom, Senior Director, Sales at InSite360, a Veeder-Root company. Angela is recognized as a leading authority in downstream petroleum process automation and operational excellence. Her career spans over 20 years. Insite360 is a leading supplier of fuel management solutions in the retail and wholesale fueling industry. Its products enable global, national and regional retail and commercial fueling operations, fuel wholesalers and supply chain members to accurately monitor fuel inventory, optimize fuel logistics and pricing, manage environmental compliance and optimize equipment performance. For more information about Insite360 products and services, contact Andy Brett at 713-222-5774 or abrett@fuelquest.com or visit www.insite360suite.com. For questions, please contact Mary Jo Burt at mburt@fuelquest.com or 713-222-5700 x5338.

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by Ed Kammerer

How Do Dripless Nozzles Reduce Risk at the Fueling Island? If you think about it, a great deal of faith and trust is put in the

drivers who refuel their vehicles at the country’s 150,000-plus self-service fueling stations. These fallible humans, who can be prone to distraction and carelessness, complete thousands of these operations involving highly flammable liquids every day, and yet there are an infinitesimally small number of catastrophic incidents that occur as a result. While conscientious drivers deserve a great deal of the credit for this, an equally important portion goes to the companies that have made the commitment over the years to develop gasoline-dispensing systems and equipment that are designed to maximize the safety of the fueling process. Still, there has been one piece of equipment—the actual fuel nozzle itself— that has awaited the full implementation of operational optimization. That’s because at the end of every refueling operation a precious few drops of gasoline or diesel fuel remain in the nozzle spout. Most of these drops are allowed to trickle out, with the bulk finding their way to the ground where there is the chance that an ignition source can ignite them and cause a fire or explosion. Or, at the very least, end up on the driver’s shoes or vehicle. FMNMagazine

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Addressing the Concerns Over the years, nozzle manufacturers have made many significant advances in the design and operation of their products. The recent goal in these advances has been the elimination of fuel loss or retention (dripping nozzles) at the conclusion of the fueling process that can—at its most spectacular (in a bad way)—create a fire risk, but can also present various other more subtle concerns for drivers, retailers and the environment if allowed to escape to the atmosphere or remain inside the fuel spout. In recent years, manufacturers have made progress in eliminating all risk during fueling operations by concentrating on the idea that fuel nozzles could be made “dripless.” In that time, all but one has settled on a specific nozzle-spout design that is capable of accomplishing this task. This design houses gutters, ripples and dams within the spout to create “liquidcatching” surfaces that ostensibly prevent the fuel from dripping out of the nozzle. While this design is effective in keeping those fugitive drops of fuel from reaching the ground, vehicle and the driver’s hands or clothes, the fuel that is retained in the “liquid-catching” style of nozzle still poses an environmental hazard. The inherent problem with this design is that when the nozzle spout is returned to the dispenser cradle, it is filled with fuel (in most cases, more fuel than what would have traditionally dripped on the ground).

RETAIL OPERATIONS This captured fuel is now exposed to the atmosphere as the nozzle sits in the cradle, which creates emissions that are heavy in volatile organic compounds (VOCs) as the fuel evaporates and escapes into the environment.

How Do Dripless Nozzles Reduce Risk at The Fueling Island?

Dripless Nozzle Technology

Diesel Capture Technology

Knowing that there still had to be a better way to more reliably deal with those final drops, OPW created a different type of free-draining fuel nozzle that would not require any liquid-catching surfaces. The features of this new nozzle design and operation are: • A dripless technology that offers a free-draining spout with no dams, gutters or hidden reservoirs to capture fuel for later release into the atmosphere • A specially designed interlock system, available on some models, that prevents fuel from flowing unless the spout is fully inserted into the vehicle’s fill pipe • A shutoff system that halts fuel flow when the nozzle is tipped up or falls out of the vehicle • Advanced double-poppet, to-thepenny flow-control technology • Comfortable two-piece hand insulator • UL and cULus listing • California Air Resources Board (CARB) approval (for models that feature a special interlock system)

Checking All the Boxes A critical concern when developing this new nozzle was ensuring that it satisfied all of the various regulations that govern the release of VOCs at fueling sites. Since 1990, the use of Stage II gasoline vapor-recovery systems has been required by states to combat the release of excess fueling emissions. In addition, Onboard Refueling Vapor Recovery (ORVR) equipment was phased in for new vehicles and was first implemented in 2001 for light-duty vehicles. However, the addition of ORVR to the vehicles essentially allowed them to do

nothing more than reprocess their own vapors when they were being refueled. In 2011, the U.S. Environmental Protection Agency (EPA) released a policy called the “Widespread Use for ORVR and Stage II Waiver.” In this action, the EPA essentially eliminated the largely redundant Stage II requirement in order to ensure that refueling vapor-control regulations were beneficial without being unnecessarily burdensome to retail petroleum marketers. The main reason for the amended policy was that a large majority of vapor-recovery systems were not compatible. In fact, they were not only incompatible, but also counterproductive. The operation of Stage II vapor-recovery systems is designed to suck the vapor out of a vehicle fill pipe while fueling, however, a vehicle outfitted with ORVR is simultaneously trying to collect the same vapors. In effect, the Stage II system is working at cross-purposes to the ORVR canister and just collecting clean air. The ultimate result is that the vapor-recovery nozzle is introducing clean air into the underground storage tank (UST), which can lead to vapor growth and tank over-pressurization. FMNMagazine

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When this phenomenon occurs, more fuel evaporates, and more harm is done to the environment. The conventional (non-Stage II vaporrecovery) nozzle solves this conundrum because it is not collecting any vapors. Now by adding the free-draining design, the nozzle also meets VOC-reduction requirements since it enables the draining of the residual fuel out of the spout and into the vehicle before the nozzle is removed and replaced in its cradle. Think of this technology as a waterfall where everything runs downhill with no resistance.

RETAIL OPERATIONS

How Do Dripless Nozzles Reduce Risk at The Fueling Island?

In addition to keeping flammable fuel off the ground, the vehicle and the driver, along with reducing VOC emissions, the free-draining nozzle design offers a variety of other benefits to all concerned parties:

The Driver

—Fugitive drops have been paid for, and those that dribble out of or are retained in the nozzle and not allowed to enter the fuel tank cannot be used to power the vehicle. Also, gasoline or diesel fuel could potentially get on the driver’s hands, clothes or shoes and would need to be washed off immediately, while fuels that run down the side of the vehicle can affect the vehicle’s finish.

The Retailer

—Spilled fuel will stain the concrete around the fuel island, creating an unattractive and unwelcoming fuel site and less-than-desirable brand image. Fugitive fuel will also gather on the nozzle trigger, hand insulator and fuel guard, making it dirty and unappealing for customers to handle. Longer term, excessive amounts of spilled fuel, or the accumulation of spilled fuel over time, will necessitate a cleanup program and, along with it, associated costs and pump-island downtime.

Conclusion Since the invention of the automobile, the loss of fuel at the completion of the vehicle-fueling process has been one of those inescapable facts of life, much like death or taxes. Today, though, new free-draining fuel-nozzle technology helps ensure that every drop of fuel will reach the vehicle’s fuel tank. This not only helps eliminate the risk of a catastrophic occurrence at the fueling island or the release of excessive levels of VOCs to the atmosphere, but also creates many ancillary benefits for the driver, the retailer and the environment. n

The Environment

—Every VOC that is allowed to escape into the atmosphere has the potential to compromise breathable air. Additionally, allowing the escape of excessive fugitive VOCs runs counter to the growing corporate missions that are designed to make the fueling process “greener,” cleaner, safer and more environmentally friendly.

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Ed Kammerer Ed is the Director of Global Product Management for OPW, based in Cincinnati, OH, USA. He can be reached at ed.kammerer@opwglobal.com. OPW is leading the way in fueling solutions and innovations worldwide. OPW delivers product excellence and the most comprehensive line of fueling equipment and services to retail and commercial fueling operations around the globe. For more information on OPW, please go to OPWGlobal.com.

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Making Lists,

Checking Them Twice Car Wash Maintenance

by Todd Klitzke

To quote the eminent author George R.R. Martin: “Winter’s coming.” Or, in many North American locales in late November 2018, it had already arrived. For the vehicle-wash operator, the arrival of winter’s blustery winds, flying snowflakes and plummeting temperatures is enough to send a chill up the spine. In preparing your wash for the cold, dark winter days, however, this old saying is especially appropriate: An ounce of prevention is worth a pound of cure. In other words, smart vehicle-wash operators are the ones that begin considering how to winter-proof their wash systems when the hazy, lazy days of summer are still in full force.

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RETAIL OPERATIONS

It is also important for each individual wash operator, regardless of the size of the facility, to tailor each maintenance checklist to the specific needs of the business or location. Even washes that feature the same equipment and are under the same ownership can have different needs based on location, customer base, average daily vehicle throughput or workforce size and experience.

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under the same ownership can have different needs based on location, customer base, average daily vehicle throughput or workforce size and experience. A great reference point is the manufacturer’s equipment manual. This document can provide specific information and “best practices” that will help facilitate the timely and correct completion of all maintenance activities. Do remember, though, that there is no such thing as a one-size-fits-all solution, and specific tasks should be added or modified as needed.

Maintaining A Sense of Control It’s a basic fact of vehicle-wash life— equipment that is not running does not wash cars, which does not put money into the cash register. On the contrary, broken or ill-performing equipment siphons funds from the bottom line and makes the wash a drain on the entire operation, whether it’s located at a convenience store or, more pointedly, the centerpiece of a standalone wash facility.

Therefore, the foundation of a wash that operates reliably and successfully in the winter is a preventativemaintenance schedule that ensures that the wash system and all of its various components are functioning in tip-top condition at all times. Creating maintenance checklists for various timelines is key in this area. Developing daily, weekly, monthly and semiannual checklists will help guarantee that both everyday tasks and more critical maintenance needs are met. It is also important for each individual wash operator, regardless of the size of the facility, to tailor each maintenance checklist to the specific needs of the business or location. Even washes that feature the same equipment and are FMNMagazine

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RETAIL OPERATIONS

4Daily

Making Lists, Checking Them Twice

Checklist

Here is a list of things to consider when doing daily maintenance checks:

n Running a test wash before the site opens will provide a first impression of operational standing each day and indicate if all equipment is functioning properly.

n Ensure that bay floors are free of debris and drains are not clogged, especially by the dirt and grime that can accumulate after a number of washes have been performed. Also, know that loose debris can fall out of truck beds or cars during the wash cycle. This debris can get caught in the equipment, causing damage and potential failures.

n Check for liquid leaks throughout system, including in the chemical pumps, hydraulics and the equipment room. n Make sure the equipment and building are clean since drivers find a wash that is tidy and clean much more approachable than one that is dirty. n Check that all blowers on the dryer assembly are working and pointed in the proper direction.

4Weekly

Checklist

Weekly checklists generally take a closer look at the electronic system that facilitates carwash operation: n Inspect all lines—air, water and electrical—for wear and secure connections.

n Inspect the Motor Control Center box for loose connections or ground shorts, as well as moisture leaks.

n Check the operations of the rollover arches, and bleed down and reset all air regulators that are used on the rollover.

n Inspect all fittings for wear, including brush-arm bearings and mountings, as well as check that all moving components are in proper alignment, which will lessen the chances that vehicle damage will occur. n Check any operational or customervisible signage, replace any burnt-out bulbs and clean the signage.

n Check for compliance with OSHA regulations, and check that all safety equipment, such as fire extinguishers, is in working order.

4Monthly Checklist

Monthly checks are the time to begin noting when any seasonal measures may need to be taken to keep the wash system in proper working order:

n Check all hardware for tightness, including items such as gearbox crank arms and the repetitive-motion components of the high-pressure pump in the equipment room. n Check oil and fluid levels throughout the system and refill if low.

n Do a run-through of hydraulic systems at a full-speed range by adjusting the flow control valve, which enables checking for any operational issues.

4Semi-Annual Checklist

Semi-annual checklists offer a look at the condition of heavy-wear items, such as hydraulic pumps, crankshafts, drive trains and chains:

n Drain, flush and refill fluids as needed. This includes all hydraulic power packs, as well as high-pressure pumps and gearbox oil for mitters. n Grease all electric motor bearings in air dryers and pumps.

n Review OSHA regulations. These regulations are updated with regularity (even as often as weekly) and can lead to compliance issues if they are not followed properly. This is also a good time to check all safety features again, such as fire extinguishers. FMNMagazine

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Making the Most of Winter

While creating and adhering to daily, weekly, monthly and semiannual checklists will keep the wash operating, there are some winterspecific items that must be considered if the wash is to survive until the birds start chirping and the flowers start blooming again. As bad as any winter can be, there are always those welcome bright, sunny 40°F days that coax people out of hibernation and prompt them to wash away the salt, dirt and grime that have been accumulating on their vehicles. When winterizing your wash, the most basic task is making sure that all equipment in the wash—boilers, floor heaters, radiant heaters, etc.— is operating properly. While the equipment is the obvious top priority, a complete inventory of the wash site and its surrounding area should be taken. Are all of the metal snow stops in place on the roof of the wash? In the event of a large snowfall, is there an area where the snow can be moved that does not interfere with the wash entrance? Have you contracted with someone to remove the snow? Or, do you have an in-house solution to snow removal? Do you have an appropriate amount of snow and ice melter on hand so the slip-andslide risk to vehicles, customers and employees is reduced?

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RETAIL OPERATIONS

Making Lists, Checking Them Twice

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When winterizing your wash, the most basic task is making sure that all equipment in the wash—boilers, floor heaters, radiant heaters, etc.—is operating properly. While the equipment is the obvious top priority, a complete inventory of the wash site and its surrounding area should be taken.

Loyalty programs can also be enhanced with winter-specific offerings. If someone washes their vehicle when it’s 40°F or lower, give them a coupon for a free wash next June. Offer a coupon for a free cup of coffee or hot chocolate if the driver upgrades to a premium wash. Create a “Beat Old Man Winter Club” that rewards drivers with a free wash if a certain number of washes are bought between the months of November and February. There is an unlimited number of ways that drivers can be rewarded for venturing into the wash bay when they’d rather be at home in front of a roaring fire. There are also some subtle tricks the operator can use to enhance the winter wash experience. Though it may seem counterintuitive, it’s true that in colder climates winter can be a much easier time to clean cars. Enabling a faster wash process to push more cars an hour through the bay will maximize the entire cost of a wash. In conjunction, a more efficient wash will translate to lower operating costs as water, power and chemical usage are streamlined when daily throughputs might not be as high. Too often, however, operators do not make the simple adjustments in wash operation as the seasons change, leading to the cost-inefficient equation of lower volumes with higher costs per vehicle.

In many cases, the best tool a wash operator can have as winter approaches is a good distributor. A solid, reliable distributor can aid the operator as preparations are made for a change in seasons. Distributors who are on top of their game are familiar with the weather conditions that are coming and have the expertise to ensure that the operator is getting the most value out of the wash equipment, as well as operating it under the most ideal efficiencies and conditions.

Conclusion

Winter’s here, so it does no good to bury your head in the sand (or snow, as the case may be). While the arrival of Old Man Winter may bring trepidation, if the proper preventative-maintenance measures are taken and proper attention is paid to the needs of drivers and the wash system itself, winter can be a profitable time for vehicle-wash operators. In the end, those that do prepare are bound to be singing a happy tune when spring finally does arrive. n

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Todd Klitzke Todd is the Technical Support Manager for the PDQ Manufacturing, Inc., De Pere, Wisconsin. He can be reached at todd.klitze@pdqinc.com. PDQ, a Dover company, is recognized as a technological leader in vehicle-wash systems, providing superior quality, outstanding support and products that contribute to its customers’ profitability. Brands include LaserWash® and ProTouch® In-Bay Automatic Vehicle Wash Systems, SwingAir® and MaxAir® Dryers, Access® Wash Activation Systems, Cortex and WALS. Products are sold and supported worldwide through an authorized distribution network. For more information, please visit pdqinc.com or call 800-227-3373.

Wholesale Energy Parts & Equipment

800-772-2300 | shieldsharper.com FMNMagazine

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Keep rolling in winter weather with MCC’s cold ow additives!

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Improves fuel handling Reduces risk of plugged filters & fuel lines Improves low temperature operability Less down time--keeps drivers safely on the road

NO FLOW = NO GO! To nd out more about MCC Fuel Additives:

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IMPROVING YOUR PERFORMANCE

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Todd Ward Todd is Vice President, Business Development at SkyBitz Petroleum Logistics. SkyBitz helps petroleum distributors overcome fleet fueling challenges. SMARTLynx and SMARTruck allow fuel distributors to decrease costs by providing transaction integrity, totalizer reconciliations, GPS geofencing capabilities and patented odometer capture technology. Fleet fueling companies can use these solutions to automate processes, go paperless and increase profitable deliveries. Visit SkyBitz at https://info.skybitz.com/.

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Over 5.6 Million Page Views* and Climbing! 100,000 Unique Visitors 270,000 Monthly Readers 950,000+ Monthly Page Views 5.6 Million Total Page Views and Counting! Thank you for making us the Number One Ranked Fuels & Convenience News Website!

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The California Air Resources Board (CARB) decided to require all newly-purchased transit buses to be carbon-free by 2029, committing the state to phasing out all fossil fuel models from its 12,000 transit bus fleet by 2040. Electric and hydrogen fuel cell-powered buses are among those expected to replace diesel and natural gas models. A number of cities in California have already committed themselves to the phase-out, with Los Angeles and San Francisco setting target dates of 2030 and 2035, respectively.

Bottom Line:

Marketers doing commercial business in California should be waryâ&#x20AC;Śbut you already know that. A lot can change between now and 2040 when idealism makes contact with reality.

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by Mark Murrell

The Internet—in this case, online training— means that training is available anywhere, anytime, with no associated business disruption.

The Long Tail and Training Scarcity A few years back, Chris Anderson published The Long Tail, a book discussing how the Internet was fundamentally changing the economics of distribution and retail. The book talks about “the tyranny of shelf space” and how it forces retailers to only stock the products that sell in the largest volume. As a result, vendors get a distorted view of what the market really wants. The author points to the evolution of online music purchases as an example. iTunes and Rhapsody brought in scores of songs and artists—virtual song files—at a much lower cost to “stock” than a physical CD. With the Internet, physical barriers are removed so variety is the name of the game. Not surprisingly, people have a huge appetite for choice, and thousands of items in every category are sold in small quantities. And, those small quantities, multiplied by the large selection, equal massive sales numbers. No physical retailer could ever stock that many items, but in the virtual world there’s no direct cost to having them available. In the general retail world, long tail economics has been at work for a decade or more, and people have come to expect massive variety. However, in many other places people are just starting to realize that the scarcity is no longer an issue. FMNMagazine

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COMMERCIAL FUELS available for people who missed the live session, but that it opens up an entirely new world of options that couldn’t even be considered in a classroom environment.

More is Better If training can be delivered without disrupting the business or infringing on the driver’s home time, why not do it more often? With the impediments removed, you can do more training than ever before, without having to limit yourself to just the highest priority items. While you may still have a prioritized list of possible training subjects, the cut-off for what can be delivered reasonably is much further down the list than it was before. As a result, different subject matter can be covered, and it can be refreshed more regularly, improving the overall absorption rate.

The Long Tail in Transportation Within the transportation industry, driver training is one of those places.

Progressive fleets are recognizing this and changing their entire training delivery model. Instead of killing themselves to schedule only the most critical sessions, they’re doing new training every quarter (or every month) online and shifting their in-person activities to more specialized work. The results are invariably positive in terms of fleet safety and overall driver quality, but it takes a big shift in mindset to consider it.

For some, “training drivers” still means pulling drivers off the road and into classroom settings. That’s a pain point. In trucking, you’re only making money when drivers are delivering goods, so if drivers are sitting in class, then the business is taking a big hit. Much like the huge cost of shelf space forcing retailers to be picky about what they stock, the huge cost of delivering classroom training has forced fleets to be very picky about what training they deliver. Orientation makes the cut, because you have to get people started the right way. Post-incident remedial work also makes the cut because insurance and enforcement people demand it. Required courses (hazmat, fire safety) could be justified as well. Beyond that, it’s pretty tough to justify much else.

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As a starting point, it’s worth asking yourself a few questions:

In the general retail world, long tail economics has been at work for a decade or more, and people have come to expect massive variety. However, in many other places people are just starting to realize that the scarcity is no longer an issue.

If there were no impediments, how much training would you like your fleet to have, and what things would you like to see covered?

If you actually delivered all that training, how much safer, more compliant, more effective and more cohesive would your driving team be? In the retail world, more products, multiplied by even tiny sales volume in each, lead to huge profits. In the training world, the equation looks similar: more training, multiplied by several subject areas, leads to huge quality and efficiency improvements (and increased profitability as a result). n

However, just like in the retail world, the old days for fleet training are gone and scarcity is no longer an issue. The Internet—in this case, online training—means that training is available anywhere, anytime, with no associated business disruption. Most people I talk to understand that the Internet makes training delivery more convenient and helps to catch the people who couldn’t attend a live session, but that’s just scratching the surface. Amazon gives me the ability to buy a TV online for the same price as Best Buy and have it shipped to my house, but that’s not the real value of Amazon. The real value is the thousands of other products I can get from Amazon that I can’t get at Best Buy. Similarly, the real value of online training is not that it makes classroom content FMNMagazine

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Mark Murrell Mark Murrell is co-founder of CarriersEdge, a leading provider of online driver training for the trucking industry and co-creator of Best Fleets to Drive For, an annual evaluation of the best workplaces in the North American trucking industry produced in partnership with Truckload Carriers Association. He can be reached at www.carriersedge.com.

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Propane Autogas Refueling

by Michael Taylor

sk any commercial vehicle fleet operator and there’s a good chance he or she will tell you their fleet is constantly faced with increasing pressure at every turn to meet or exceed ever-lowering emissions standards. It’s a growing issue for commercial fleets and many of the solutions can be expensive. Fortunately, propane autogas helps fleets reduce emissions at a cost that is affordable to them, unlike other alternative fuels like natural gas and electric. In fact, propane autogas offers the lowest total cost-of-ownership of any fuel—traditional or alternative. That’s because in addition to lower fuel costs and reduced maintenance, propane autogas fleets have a variety of refueling options from which to choose. This allows fleets to choose a refueling strategy that is custom tailored to meet their budget and operational needs. The following are the five most common refueling strategies for propane autogas fleets.

Standard Private Station

A standard private station can meet the needs of fleets operating with fewer than 50 vehicles and who want the convenience of an on-site refueling option. Propane retailers can assist fleet owners in choosing the centralized fueling location. The station includes a 1,000- to 3,000-gallon tank and a single autogas fuel dispenser with a quick-connect nozzle that securely locks into place during refueling to eliminate spills and evaporative emissions. These lightweight nozzles allow users to refuel with one hand and do not require any extra protective equipment. FMNMagazine

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When talking with fleet operators about this refueling option, propane retailers should discuss the different ownership options: purchasing or leasing. If the fleet owner decides to lease the infrastructure, the propane or infrastructure provider will work with the fleet on building the proper setup. The fleet owner will cover the cost of the site preparation, which includes installing crash protection and an electrical supply. Depending on the site and size of the fleet, the cost for a leased setup is $1,500 – $15,000. If the fleet owner chooses to purchase the infrastructure, they will own the fuel storage tanks, pump, motor and dispenser. The average cost of ownership is $20,000 – $60,000 for infrastructure, as well as the $1,500 – $15,000 cost for site preparation.

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Options to Fit Any Fleet

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COMMERCIAL FUELS

Many fleets may want to take advantage of propane autogas, but are uncertain about investing in infrastructure, don’t have the space to build infrastructure, or state or local laws, regulations or codes prohibit installation of infrastructure. When talking to those fleets, propane retailers can suggest mobile refueling as a convenient solution.

Advanced Private Station

While similar to a standard private station, the advanced private station offers a larger capacity and fully customizable infrastructure for fleets operating with more than 50 vehicles. The advanced private station allows for owners to choose a convenient, centralized location for all of their refueling needs. The site includes one or more high-capacity fuel storage tanks and multiple dispensers with quick-connect nozzles. It may also include an optional canopy for protection from inclement weather. As the fleet grows, the infrastructure can add more dispensers and propane autogas fuel storage tanks, making this option fully customizable for any fleet. Just like standard private stations, fleet owners can choose to purchase or lease the infrastructure of an advanced private station. Fleet owners who choose to lease are responsible for the site preparation, which would cost an average of $5,000 – $75,000. Fleet owners who choose to purchase their infrastructure pay for the propane fuel storage tanks, pump, motor and dispensers equipped with a fuel data management system, which may include cardlock and vehicle tracking capabilities. This setup costs $5,000 – $75,000 for site preparations and $60,000 – $225,000 for infrastructure.

Mobile Refueling

Temporary Refueling Network

Some fleets may be in the process of installing permanent infrastructure and need to deploy vehicles prior to completion of the installation. Propane autogas has a solution for this fleet also. Some propane retailers can provide a temporary refueling solution complete with a fuel storage tank and dispenser mounted on a trailer. This scenario works for both short-term or extended use. Filling the tank is scheduled with the propane retailer, but like mobile refueling, costs and situations will vary. This is also a viable solution for fleets such as construction vehicles that require refueling while working for long periods on sites located away from the centralized refueling station.

Public Refueling Networks

For fleets that service a wide area or have limited space for refueling, investing in infrastructure may not be feasible. In this case, utilizing a public refueling network can keep fleets on the go no matter where they are in their service area. Public refueling networks provide 24/7 security and convenience. Using a cardlock system, the network tracks fuel use and costs per vehicle along a fleet’s route. This option works for fleets of any size. A complete list of public refueling stations is available from the U.S. Alternative Fuels Data Center at afdc.energy.gov/stations. With these talking points, a propane retailer can easily help a fleet find success with propane autogas. Be sure to take into account the fleet size, potential growth, available space, routes and refueling requirements in order to develop the right refueling solution. Propane retailers can also talk with fleets about establishing a fuel contract and securing a fleet’s business year-round. To learn more about propane autogas refueling strategies and for more talking points, visit www.propane.com/on-road-fleets/refueling/. n

READ MORE at FuelsMarketNews.com

Michael Taylor Michael is the director of autogas business development for the Propane Education & Research Council. He can be reached at michael.taylor@propane.com.

The propane retailer will refuel a fleet’s vehicles on-site using a propane autogas bobtail truck. Propane marketers can work with fleet owners to develop a scheduled time for refueling that works around their demanding schedules. FMNMagazine

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The list below represents acronyms used in this issue of Fuels Market News.

ACE

American Coalition for Ethanol

LDV

AFCS

U.S. Alternative Fuels Data Center

MMBPD Million Barrels Per Day

AEO

U.S. EIA Annual Energy Outlook

API

ASTM ATG

Barrels Per Day

B10

COMPANY

10% Biodiesel, 90% Petroleum Diesel

BEV

Battery Electric Vehicles

bpd

PAGE

ADD Systems......................................... 18

Barrels Per Day

CAFE

CARB CCD

Biobor Fuel Additives............................ 39

CCDF

Eastern Energy Expo ............................. 45

cULus

Cummins & White..................................17 Ecogreen Tank Monitor.......................... 53

FuelConnect 360............ Inside Back Cover Fuels Market News................................ 62 iGen...................................................... 23 Infineum UK..........................................11 MidContinental Chemical Company, Inc................................. 50 – 51 North American Bancard........................58 OPW Retail Fueling................................13 PDQ Manufacturing, Inc........................ 31 Petroclear.............................................. 29

RDM Industrial Electronics........Back Cover Shields, Harper & Company................... 49

SkyBitz.......................... Inside Front Cover Source North America.............................27 Southeast Petro-Food Marketing Expo... 33 TMC.......................................................32 ValvTect Petroleum Products...............4 – 5

CCDI

DOE

Combustion Chamber Deposits

Combustion Chamber Deposit Flaking Combustion Chamber Deposit Interference

Canadian and U.S. Underwriters’ Laboratories

15% Ethanol, 85% Gasoline

EBT

Electronic Benefits Transfer

EGR

Exhaust Gas Recirculation

EIA

U.S. Energy Information Administration

EISA

Energy Independence and Security Act

EPA

U.S. Environmental Protection Agency

Electric Vehicle

FDA

U.S. Food and Drug Administration

FTC

U.S. Federal Trade Commission

FTE

Full-Time Employee

GHG

Greenhouse Gas

GPS

Global Positioning System

IEA

International Energy Agency

ISA

Illinois Soybean Association

kbpd LAE

California Air Resources Board

Exploration and Production

E15

LAC

Corporate Average Fuel Economy

U.S. Department of Energy

E&P

American Society for Testing and Materials Automatic Tank Gauge

b/d

Our Advertisers

American Petroleum Institute

Information Technology

Thousand Barrels Per Day

Lowest Additive Concentration Loss Adjustment Expense

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LNG

Light-Duty Vehicles

Liquefied Natural Gas

MTBE

Methyl Tertiary Butyl Ether

NACS

National Association of Convenience Stores

NBB

National Biodiesel Board

NAAQS National Ambient Air Quality Standards

NATSO National Association of Truck Stop Operators NCWM National Conference on Weights and Measures NHTSA National Highway Traffic Safety Administration NORA

National Oilheat Research Alliance

OEM

Original Equipment Manufacturer

NZEV

OPEC

National Zero-Emissions Vehicles Program Organization of Petroleum Exporting Countries

ORVR

Onboard Refueling Vapor Recovery

PCV

Positive Crankcase Ventilation

OSHA

PEA PEI

PERC

PHEV PLLD

U.S. Occupational Safety and Health Administration Polyether Amine

Petroleum Equipment Institute

Propane Education and Research Council Plug-in Hybrid Electric Vehicles

Pressurized Line Leak Detection

PMAA

Petroleum Marketers of America

RFG

Reformulated Gasoline

RFA RFS RIN

RON RVP

Renewable Fuels Association Renewable Fuel Standard

Renewable Identification Number Research Octane Number Reid Vapor Pressure

SIGMA Society of Independent Gasoline Marketers of America UL

Underwriters’ Laboratories

UST

Underground Storage Tank

WTI

West Texas Intermediate

VOC ZEV

Volatile Organic Compounds

Zero Emission Vehicle

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